Tax Calculation - Both Spouses Overseas

for and have elected to take the Foreign Earned Income Exclusion. One spouse will be eligible for the Foreign Housing Exclusion.

$95K. Assume the next housing exclusion amount is $5000.

calculate the tax on this.

sure we come out better both taking the FEIE.

I need to make an assumption. I assume that when you state that one spouse will be eligible for the housing exclusion, you are telling us that you live in separate foreign households. (This appears to be a good assumption as later you state that you are in Bermuda rather than both of you are in Bermuda). If the eligible spouse is the higher earning spouse then I believe your calculation is correct. (95 + 5 + 85 = 185). If the eligible spouse is the lower earning spouse, then I believe you have overstated the exclusion by $5K. (95 + 80 + 5 = 180)

for and have elected to take the Foreign Earned Income Exclusion. One spouse will be eligible for the Foreign Housing Exclusion.

is $95K. Assume the next housing exclusion amount is $5000.

and calculate the tax on this.

sure we come out better both taking the FEIE.

Correct, we live in different countries. Wife lives in Canada and I live in Bermuda. I am the higher earning spouse. She won't get FEIE even if her income increases because she owns her home, but we're hoping anyway that she will move to the USA before too long.

I hadn't considered in asking my question, that if she moves to the USA before

12/31/13, she would not be eligible for the FEIE, but rather for the FTC, which puts a whole different face on things. We get a little extra "kick" out of the FEIE because usually it's on the lowest-taxed $95K of income, but in our case we'll get her income and my housing credited at rates in the 25-28% range.

12/31/13, she would not be eligible for the FEIE,.

I don't see how you reached the above conclusion. Eligibility for the period of time she was still resident in Canada in 2013 would still be available under either the bona fide resident test or the physical presence test. Assuming she passes either test that would cover her 2013 days in Canada, her maximum exclusion would be $97.6K x foreign days over 365.